FocusAsia ABS prices to rise as producers trim rates amid poor margins

19 July 2011 06:43  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS)--Prices of acrylonitrile-butadiene-styrene (ABS) resins in Asia are expected to rise in the next two weeks as producers cut operating rates and tighten supply, although prices seem to have reached a plateau at the moment, market sources said on Tuesday.

ABS prices are hovering at around $2,150/tonne (€1,527/tonne) CFR (cost & freight) China, despite suppliers’ efforts to raise them, said traders and producers.

After offers were hiked to $2,170-2,200/tonne CFR China around 13 July, spot trades have been languishing at the low-to-mid $2,100s/tonne CFR China over the past week.

“Producers require higher prices at $2,300/tonne and above to break even, given the high feedstock costs,” said a Korean producer.

A number of ABS plants in Asia have trimmed rates over the past several weeks as their margins have been squeezed by elevated raw material costs and lacklustre resin pricing.

Several major plants in eastern China such as Tianjin Dagu Chemical’s 200,000 tonne/year unit, LG Yongxin’s 500,000 tonne/year unit and Zhenjiang Chimei’s 700,000 tonne/year unit are operating at a reduced rate of around 50%, according to several market sources.

The recent strength of raw material styrene monomer (SM) and butadiene (BD) prices have eroded the margins of ABS makers.

SM prices rose by $100/tonne to $1,490/tonne CFR China on 18 July, from around $1,390/tonne for the week ended 17 June. BD prices rose by $505/tonne to $4,275/tonne CFR NE Asia on 15 July, up from $3,770/tonne CFR NE Asia on 17 June.

The long supply in the ABS market caused prices to slump to $2,060/tonne CFR China in late June from $2,325/tonne CFR China in mid-May. Prices have subsequently rebounded, but the uptrend appears to be capped at the moment.

“Buyers have picked up some parcels over the past two weeks and are therefore resistant to the higher offers this week,” said a trader in Hong Kong.

With the debt crisis ongoing in the eurozone and the weak economic performance in the US, buyers of ABS in Asia are adopting a cautious stance, given the uncertain demand for China-made goods.

However, with output being reduced in recent weeks, the availability of the resin has tightened and prices are expected to firm in August.

“Stocks are becoming less ample, which would help support prices going ahead," said a resin dealer in Hong Kong.

A Taiwanese producer said, “We hope that the reduced output could sustain prices and higher prices would help alleviate the pressures on the margins of producers.”

ABS is used in the construction industry and in the manufacture of office equipment, consumer electronics, toys and automobiles.

($1 = €0.71)

For more information on ABS, visit ICIS chemical intelligence
Please visit the complete ICIS plants and projects database
Read John Richardson and Malini Hariharan’s blog –
Asian Chemical Connections

By: Clive Ong
+65 6780 4359

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